Razing California
We probably have to tank the state to save it, writes Adam Sparks at biggovernment, in "Go Bankrupt, California, Please":

Here's the problem, notwithstanding a current state budget deficit of 25 billion dollars, the state has 700 billion dollars in unfunded pension liabilities. This is ticking time bomb. No matter how much we cut and balance today's budget, we will never catch up and meet the needs of the ridiculously high unfunded pensions. This is the problem. Brown's budget may take away state workers' cell phones and some social services dollars, but seriously, big deal. This is just more smoke and mirrors. It just kicks the can down the road. This will not solve our major structural problem.

Legalizing online poker, taxing marijuana (both proposed) and taxing air (already passed through cap and trade) will not solve the budget problems. The latter is a way of taxing the few manufacturing industries still dumb enough to be creating jobs in California. If they hadn't got the memo earlier, this bill should be a neon sign. Get out of Dodge. We don't see many folks clamoring for yet cleaner air, but we see millions looking for work.

...Without the political will to attack both the structural problems of K-12 funding and union pensions, there can be no solution to our structural budget crisis. Governor Brown knows this. The alternative is bankruptcy. Federal law prohibits states to file for bankruptcy, but they do allow for a federal receivership to be established and a receiver to take over. This is a distinction without a difference. This would allow us to cancel the pension agreements and refashion them to make sense considering our current economic malaise.

Bankruptcy conveys the plain facts that political rhetoric tries to conceal. It tells people who depended on the bankrupt government that they can no longer depend on that bankrupt government. It tells the voters who elected that bankrupt government, with its big spending promises, that they made a bad mistake that they would be wise to avoid making again in the future.

Legally, bankruptcy wipes out commitments made to public sector unions, whose extravagant pay and pension contracts are bleeding municipal and state governments dry. Is putting an end to political irresponsibility and legalized union racketeering dropping dead?

Politics being what it is, we are sure to hear all sorts of doomsday rhetoric at the thought of cutbacks in government spending. The poor will be starving in the streets, to hear the politicians and the media tell it.

But the amount of money it would take to keep the poor from starving in the streets is chump change compared to how much it would take to keep on feeding unions, subsidized businesses and other special interests who are robbing the taxpayers blind.

Letting armies of government employees retire in their 50s, to live for decades on pensions larger than they were making when they were working, costs a lot more than keeping the poor from starving in the streets.

Pouring the taxpayers' money down a thousand bottomless pits of public and private boondoggles costs a lot more than keeping the poor from starving in the streets.

Comments

It's interesting that the PE-U's haven't attempted to get ahead of this issue by putting forward some proposals that address potential solutions - even if these were inviable. They're just hunkering down and playing the same old game, making threats and telling the public that we'll be living in Thunderdome if they don't get their way.

I think that the democratic liability of allowing Public Unions is becoming evident to people. They compel the public to finance the political activity of a privileged class, which is the permanent government. Inevitably you get the sort of policy capture that we're experiencing.

moe
at January 18, 2011 7:00 AM

In the end, it's moot. There is not enough money. You can't get enough money. The people do not have it. The state cannot take it.

Federal receivership should result in a loss of representation. We don't let minors and incompetents vote. Those who pay the bills make the rules.

Maybe China could buy the entire state for a trillion dollars.

California has some hard choices. I'm not laughing, New York isn't that far behind.

MarkD
at January 18, 2011 8:58 AM

Rarely mentioned is that California routinely, and has for decades, sends far more the the federal government than we receive back in federal outlays. Running about $50 billion a year

We subsidize rural states, as do other high-income states as NY, Illinois, and Michgigan. A state like Kentucky receives back $4000 per capita net from the federal government.

Oddly enough, we could balance the federal budget by requiring each state get back equal what they send--and that would be a huge boon for California.

Check out Tax Foundation stats. It is rural states that cause the federal deficit.

BOTU
at January 18, 2011 9:02 AM

Let me get this straight: the solution to California's fiscal problems is to default on its debts (causing huge hits to the investors large and small who purchased our bonds) and let the federal government take over? Sounds like a winning combination to me.

It is true that rural states usually receive more Federal dollars than they pay in taxes, and urban coastal states usually get less. But the federal deficit is mostly caused by military spending and entitlements. Nothing else is really consequential.

Christopher
at January 18, 2011 9:53 AM

Unfortunately, statistics can be rigged to show anything you want. For example, tax dollars in the form of Federal and Military salaries are going to go to two types of states, those that have large federal bureaucracies, because they have lots of Federal lands, military facilities and National parks, and those states who have lots of military bases and no state income tax because when people enter the military from a state that has income tax and move to one who doesn't, those with half a brain (most of them) immediately change their residency. In a lot of states that are primarily rural, a little spending when calculated per capita, goes a long way to raising their average. So if these types of federal outlays are included in the linked calculations, those are enough to make the whole calculation pretty meaningless. The states themselves, and the Federal government have self selected for these outcomes. In other words, it is not a result of good lobbying efforts or congressional earmark spending, nor is it inherently static.

Isabel1130
at January 18, 2011 11:10 AM

In other words, it is not a result of good lobbying efforts or congressional earmark spending

I'd say the massive subsidies given the corn states are entirely a product of good lobbying efforts, wouldn't you?

Christopher
at January 18, 2011 11:32 AM

"I'd say the massive subsidies given the corn states are entirely a product of good lobbying efforts, wouldn't you?"

Yes, but three points, the subsidies are not going to the "states" per se. They are going to massive multi national agra businesses such as ADM, who just happen to grow the corn in those states where corn will grow best. Second, as other posters have pointed out these are a drop in the bucket compared to defense and other outlays. Third, this is a lefty subsidy, kind of like the collection plate for the "Church of Global Warming" so it must be ok No?

Isabel1130
at January 18, 2011 12:27 PM

"We subsidize rural states, as do other high-income states as NY, Illinois, and Michgigan. "

True. I say end farming subsidies and let people pay the true cost of food. That'll even up the outlay pretty quick, and show the coasts what that money has been doing for them.

momof4
at January 18, 2011 2:16 PM

Yes, if you review that Tax Foundations stats, you find that larger states pay surpluses to DC, and smaller states (in terms of population) are lard-buckets, subsidized.

The most mollycoddled, knock-kneed, enfeebled, subsidized and protected people on earth are rural Americans. The travel on subsidized highways, use subbed electricity, subbed water systems, subbed postal services, subbed telephone service, subbed airports and railstops.
Without federal subsidies, rural America would blow away, as it should, in a free market.

Farmers in Montana get more from the federal government than they do from farming.

Military spending? Well, let's see--a military system controlled, designed and funded by Congress with borrowed money for the last 60 years. Hmmm. Oh, I am sure that is not 90 percent lard, aren't you? Not porkulus. No, no way.

The Red State Socialist Empire: The real cause of the US federal deficit.

BOTU
at January 18, 2011 2:31 PM

Better yet, Butt-Head, how about each state keep all its money, rather than sending it to Washington, which really only would need a bit for national defense, the courts, and a handful of other things, if the system worked the way it was supposed to. With each state keeping most or nearly all of the money it would otherwise send to Dee Cee to be redistributed, we would actaully have state sovereignty again, rather than state dependence on the real BOTUs in Dee Cee.

mpetrie98
at January 18, 2011 3:04 PM

Farmers in Montana get more from the federal government than they do from farming

Wouldn't surprise me if this were true. Our farming subsidy program helps to make us fat, and undercuts third world farming, causing (what else?) starvation of third-worlders. It is a travesty.

I'm sure the DoA building could be put to better use, such as a prison for corrupt federal officials, just down the street from the Capitol.

mpetrie98
at January 18, 2011 3:10 PM

Yes, but three points, the subsidies are not going to the "states" per se. They are going to massive multi national agra businesses such as ADM, who just happen to grow the corn in those states where corn will grow best. Second, as other posters have pointed out these are a drop in the bucket compared to defense and other outlays. Third, this is a lefty subsidy, kind of like the collection plate for the "Church of Global Warming" so it must be ok No??

1. They're brought home to their states by their congresscritters who have disproportionate influence in our federal government for a variety of reasons.

2. I think it was me that pointed that out.

3. You're wrong - this isn't feed the world stuff; these subsidies really got going as a result of Nixon admin efforts address domestic unrest over food prices. And why do you think I'd support left feed-the-world nonsense anyway?

I say end farming subsidies and let people pay the true cost of food. That'll even up the outlay pretty quick, and show the coasts what that money has been doing for them.

Good idea. But you do know what is the state produces the largest amount of food in terms of $$, right? It's a coastal state.

Christopher
at January 18, 2011 3:24 PM

That's as may be, Christopher, but the bulk of the grains and meats come from the middle states. The ones that BOTU is always bitching about.

Of course without those subsidies and leases, beef would double in price, and he'd bitch that Big Meat is gouging the public.

I'd love to see corn subsidies go away, and get corn out of my gas tank and out of my soft drinks.

brian
at January 18, 2011 5:00 PM

The most mollycoddled, knock-kneed, enfeebled, subsidized and protected people on earth are rural Americans. The travel on subsidized highways, use subbed electricity, subbed water systems, subbed postal services, subbed telephone service, subbed airports and railstops. Without federal subsidies, rural America would blow away....

And urban Americans would be paying $20 per carrot at the grocery store. And wearing gas masks because there would be no ethanol to reduce the emissions from their cars.

Those subsidized roads through rural America enable a vast logistics system that keeps cities supplied with low-priced food, gasoline, and manufactured goods.

Conan the Grammarian
at January 18, 2011 5:04 PM

But you do know what is the state produces the largest amount of food in terms of $$, right? It's a coastal state.

And guess where the Central Valley gets its water. I'll give you a hint. Its a mostly urbanized area (which is starting to bitch about losing so much water in order that someone else can grow crops in a desert).

Conan the Grammarian
at January 18, 2011 5:07 PM

Conan-

You ever hear of toll roads? If farmers want to bring their crops to market, they can build toll roads.

BOTU
at January 18, 2011 5:19 PM

Folks, can we just totally ignore Asshole? There's no point in engaging him. He's a broken record who hates the flyover states and wants the U.S. to be totally undefended. He's made himself clear on that. And at this point he very clearly has nothing further to say.

Cousin Dave
at January 18, 2011 5:39 PM

Check out Tax Foundation stats. It is rural states that cause the federal deficit.

Posted by: BOTU at January 18, 2011 9:02 AM

Yeah, no problem. You want to get say, southern/eastern (rural) Oregon off the Fed dole? The Stop preventing them from selling their natural resources aka timber. Release federal land into state hands (or sell it to citizens directly). Nope, gotta save the forests (even the rotting stuff that ought to be cleaned up to prevent fires) and don't forget the spotted owls!

Oh wait, they did stop the "federal timber payments" in many counties. And now they're bankrupt or close to it.

Look at how much land the fed government owns or administers for states in the west/mountain west states.

Cousin Dave, you're probably right. It just chaps my hide as I've watched those areas have a huge housing boom that had no real economy backing it up locally other than retirement/white-urban flight dollars.

Okay, so you know that map. You must have posted it while I was typing.

Conan the Grammarian
at January 18, 2011 6:32 PM

The problem with people like BOTU is that they are marginal thinkers. Incapable of seeing anything past zeroth-order effects of their proposals, they are unable to accept that their plots will fail horribly.

Another side-effect of MTD (marginal thinking disorder) is the inability to see ones own mental limits. BOTU thinks he's smart because he knows how to throw buzzwords around. However, he has no ability to reason anything beyond his own biases.

So in his mind, all you do is cut the subsidies to the farmers and the government isn't broke anymore.

Yes, the subsidies distort the market, but the money is going to come from somewhere, subsidy or not. Or the products will go away.

BOTU can't see beyond his disdain for flyover country. Because he isn't capable of the deeper levels of deductive and inductive reasoning require to do so.

brian
at January 18, 2011 10:55 PM

Really Chris? I think it says 100K not 10K!!! Here's the link... Cheers!